Chibuku Products Limited Vs. Malawi Revenue Authority; Arbitration Appeal No. 1 of 2013

Abstract

This case involves Chibuku Products Limited's appeal against the Malawi Revenue Authority's (MRA) assessment for failing to deduct and remit non-resident tax on management fees paid to SABMiller Management BV. The core dispute revolves around the applicability of double taxation treaties and the residence status of the recipient entity, which determines whether the management fees are exempt from tax. The MRA argued that, under Malawi law and the Malawi/UK double taxation agreement, the fees were taxable, citing the recipient's residence in the United Kingdom. Chibuku contended that the fees qualified for exemption under the Malawi/Netherlands agreement as "industrial or commercial profits." The court found that the management fees were indeed taxable in Malawi, as they did not qualify for exemption under the treaties, and upheld the assessments and penalties imposed by the MRA. The outcome reinforced that management fees paid to non-residents are subject to Malawi's withholding tax unless explicitly exempted by a double taxation treaty, and that the penalties for non-compliance were justified [T2-T5].